How to claim a capital loss on shares of delisted companies

Please clarify how to claim a capital loss on shares of delisted companies. Please let me know the procedures and the number of years that can be carried forward under the income tax rule. I hope you will be able to dispel my doubt and allow me to recoup my losses under the income tax rule against future capital gains.

According to income tax laws, a person only realizes capital gains or suffers a capital loss when the fixed asset is transferred. The income tax law defines the term “transfer” to include the extinguishment of rights in the asset in addition to the actual transfer of the asset. I guess the stocks you’re talking about were only written off and still exist.

Once the shares are written off, it becomes almost impossible to sell them unless the Company provides an exit route so effectively that the investment becomes irrecoverable and constitutes a real loss to the taxpayer, but we cannot claim this. loss because the shares were neither extinguished nor transferred by you. . If the company is in liquidation or the company has been subject to NCLT under the IBC and the NCLT has authorized the company to extinguish the shares, you can claim the loss. Whether the actions have been turned off or not, you can check it from your demat statement.

If these have also been extinguished, you can apply indexation to your original cost and claim the full indexed cost in the short or long term depending on the holding period. This loss can be carried forward for eight years if it cannot be adjusted during the current year.

Balwant Jain is a tax and investment expert and can be contacted at [email protected] and @jainbalwant on Twitter

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